Most traders focus on finding the perfect entry — but professionals focus on managing risk. The difference between a consistent trader and a losing one often comes down to position sizing — knowing how many lots to trade based on your capital, stop-loss, and acceptable risk.
The Golden Formula
Position Size = Capital ÷ Risk per Trade ÷ Stop-Loss Points
Let’s decode each part:
Capital — The total money in your trading account.
Risk per Trade (%) — The percentage of your capital you’re willing to lose per trade (usually 1–2%).
Stop-Loss Points — The distance between your entry price and stop-loss.
This simple formula can save you from blowing up your trading account.
